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FCC’s Auction Expert Firm Advised by Reed Hundt

WASHINGTON: Reed Hundt, the former head of the Federal Communications Commission, is on the advisory board of one of three companies retained by the FCC to advise it on developing TV spectrum incentive auctions. Hundt, who headed the commission from 1993-97, said at a Columbia Business School event in 2010 that he an other regulators “decided in 1994 that the Internet should be the common medium in the United States and broadcast should not be.”

Hundt is on the board of Auctionomics, a Palo Alto, Calif., firm specializing in auction software, including a product dubbed “Clock Auction” that can accommodate reverse auctions. The legislation authorizing the FCC to hold the incentive auctions requires reverse auctions to determine how much broadcasters are willing to take in return for their spectrum.

Power Auctions of Washington and MicroTech of Vienna, Va., are the two other “leading experts in auction theory and implementation,” the FCC said it has retained. Power Auctions also offers clock auction software as well as a “simultaneous multiple-round auction” platform among others. The company is led by Lawrence M. Ausubel, a professor of economics at the University of Maryland. He is also a member of the Spectrum Exchange Group of Bethesda, Md. The group opposed protections for UHF TV stations facing displacement in the 700 MHz auctions, and worked privately as early as 2000 to free up portions of the UHF broadcast spectrum, according to The New York Times.

The co-founder and chairman of Auctionomics also is listed as a member of the Spectrum Exchange. Dr. Paul Milgrom, was co-president of the group along with Ausubel. Both men are listed as executives in a third group, Market Design Inc., which consulted on the design of auction markets in the mid- to late-1990s. Milgrom is a professor of economics at Stanford University, a member of the National Academy of Sciences and the American Academy of Arts and Sciences and recipient of Nemmers Prize in Economics.

Both he and Ausubel were among the 112 economists who signed a letter imploring President Obama to give the FCC incentive auction authority. So was Auctionomics affiliate Jonathan Levin, chair of Stanford’s economics department. The commission could not have provided the incentive—sharing auction proceeds with those broadcasters who relinquish spectrum—without Congressional legislation. The president signed that legislation last month.

MicroTech, led by Anthony R. Jimenez, a retired U.S. Army officer, “will provide state-of-the-art security, systems development and implementation support directly tied to their cloud computing solutions,” according to the FCC.

Regarding the move, FCC Chairman Julius Genachowski said, “I am delighted to have this world-class team of experts advising the commission on this historic undertaking. Our plan is to ensure that incentive auctions serve as an effective market mechanism to unleash more spectrum for mobile broadband and help address the looming spectrum crunch. Our implementation of this new Congressional mandate will be guided by the economics, and will seek to maximize the opportunity to unleash investment and innovation, benefit consumers, drive economic growth, and enhance our global competitiveness. The knowledge and experience of this team will complement the substantial expertise of agency staff to meet these goals.”